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Informist, Sunday, Aug 11, 2024

 

MUMBAI – US-based Hindenburg Research LLC has alleged that Securities and Exchange Board of India Chairperson Madhabi Puri Buch and her husband had stake in offshore funds which were also allegedly used by Vinod Adani, the elder brother of Adani Group Chairman Gautam Adani, to invest in Indian stocks, including Adani Group companies. This, the research firm said in a report on Saturday, raised the prospect of conflict of interest in SEBI's investigation of the research firm's allegations against the Adani Group in its report of January 2023.

 

In a joint statement, the Buchs have denied Hindenburg Research's allegations and said they were not true. Buch said that all disclosures were furnished to SEBI over the years.

 

Hindenburg Research, quoting from "whistleblower documents", said that Buch and her husband Dhaval Buch first opened an account with IPE Plus Fund 1 in June 2015 in Singapore. It said that as per the whistleblower documents there was a complex, multi-layer structure in which a Vinod Adani-controlled company had invested in Bermuda-based Global Dynamic Opportunities Fund, which then invested in IPE Plus Fund 1. In effect, while Global Dynamic Opportunities Fund was the main foreign fund, IPE Plus Fund 1 was one of its sub-accounts.

 

Quoting from a non-profit project called AdaniWatch set up by Bob Brown Foundation, Hindenburg Research said that IPE Plus Fund 1 invested money in Indian stocks and traded in derivatives and other financial instruments.

 

Hindenburg Research said that the founder and chief investment officer of IPE Plus Fund 1 was Anil Ahuja who "at the same time...was a director of Adani Enterprises." Quoting from whistleblower documents, the research firm said that Dhaval Buch wrote to Mauritius fund administrator on Mar 22, 2017, that only his name be registered as investor in the fund, "seemingly moving the assets out of his wife's name." A couple of weeks later, on Apr 5, 2017, Madhabi Puri Buch joined SEBI as a whole time member.

 

Hindenburg Research said, quoting from whistleblower documents, that on Feb 25, 2018, when Buch was the whole-time member of SEBI, she personally wrote to India Infoline using her private email account, stating that her husband would like to redeem 100% of the units held in Global Dynamic Opportunities Fund and enclosed the redemption form in the mail.

 

Pointing to the Supreme Court's statement in the case pertaining to Adani Group that SEBI had drawn a blank in its recent investigations into who funded the group entities' offshore shareholders, Hindenburg Research said that it found it "unsurprising that SEBI was reluctant to follow a trail that may have led to its own Chairperson."

 

In its January 2023 report, Hindenburg Research claimed that it had uncovered a labyrinth of offshore shell entities managed by Vinod Adani, former director of Adani Enterprises and other Adani Group companies. The report alleged that these offshore companies were seemingly used for, among other things, routing money through Adani's private companies to the group companies in order to give the appearance of strong financial solvency, and to evade the minimum public shareholding requirement for domestic listed companies. The Adani Group had dismissed this and other allegations in the Hindenburg report as baseless and malicious.

 

In its report on Saturday, Hindenburg Research also alleged that from April 2017 to March 2022 when Buch was whole-time member and chairperson at SEBI, she had a 100% stake in a Singapore-based consulting firm called Agora Partners. As per information on SEBI's website, Buch was a whole-time member from Apr 5, 2017 to Oct 4, 2021, and she joined the market regulator as its chairperson on Mar 2, 2022.

 

Hindenburg Research alleged that on Mar 16, 2022, Buch transferred her shares in Agora Partners to her husband. The firm further said that in 2019, when Buch was a whole-time member at SEBI, her husband was appointed as a senior advisor to Blackstone, a global equity firm and a large investor in India.

 

The firm hinted at an alleged connection between Buch being a SEBI official and Blackstone's activities in Indian real estate investment trust space. It said that, "Blackstone has been one of the largest investors and sponsors of REITs, a nascent asset class in India." The firm alleged that during Dhaval Buch's time as advisor to Blackstone, SEBI proposed and facilitated major changes in REIT regulations, including board nomination rights to unitholders, which allowed unitholders like Blackstone to nominate directors.

 

Hindenburg Research alleged that when Buch, as SEBI chairperson, was promoting REITs as her favourite asset class in industry conferences and urging investors to look positively at it, she "omitted to mention that Blackstone, who her husband advises, stands to gain significantly from the asset class."

 

In the joint statement with her husband, Buch said that, "it is unfortunate that Hindenburg Research against whom SEBI has taken an Enforcement action and issued a show cause notice has chosen to attempt character assassination in response to the same."  End

 

Reported by Rajesh Gajra

Edited by Ashish Shirke

 

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